On 23 December 2021, the AEMC made a final rule that amends the National Electricity Rules (NER) to remove unaccounted for energy (UFE) from the calculation of liable load in the Retailer Reliability Obligation (RRO). 

The final rule replaces the term ‘adjusted gross energy’ (AGE) with a new term, ‘adjusted metered energy’ (AME), for the purpose of calculating liable load in the RRO. 

The difference between AGE and AME is that the new term does not include an allocation of UFE. All other aspects of the calculation of liable load and the RRO remain unchanged.

The Commission is satisfied that the final rule will contribute to the achievement of the NEO for the following reasons:

• it will minimise administrative burden on AEMO to calculate and store additional UFE data to only be used for the RRO
• due to the immateriality and unpredictability of UFE it is unlikely to undermine market participants' hedging strategies that support reliability in the NEM during 'reliability gap' or any other periods
• it is a proportionate response to the risks faced by liable entities (for the purposes of the RRO) and reliability in the NEM during 'reliability gap' periods
• it provides regulatory clarity for liable entities on the treatment of UFE in the calculation of liable load in the RRO.

The final rule commences on 1 May 2022.

Consultation process

On 28 October 2021, the AEMC published a consultation paper seeking feedback on the proposed rule change.

The AEMC received six submissions to the consultation paper for this rule change request from AEMO, AER, EUAA, Ergon Energy, Origin Energy and Shell.

The Commission considered the rule change request was a request for a non-controversial rule change as UFE is small and the proposed change was unlikely to have a significant impact on the national electricity market. 

The Commission received no objection to the use of the expedited process. Accordingly, this rule change was considered under the expedited process.

Background

On 3 August 2021, the AEMC received a rule change request from the Australian Energy Market Operator (AEMO) to amend the NER to remove UFE from the calculation of liable load in the RRO. 
When the Global Settlement rule commences on 1 May 2022, it will shift how UFE is allocated in the national electricity market (NEM). As a result, UFE will be explicitly included in the calculation of liable load in the RRO. 

AEMO considers UFE introduces a source of variability and uncertainty that cannot be managed in advance. Therefore, AEMO proposed it should be removed when calculating liable load and determining compliance with the RRO.

AEMO also provided a proposed draft rule with the request, which is available below.